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Consumer Reports urges the FTC and Congress to ban costly junk fees

President Biden calls for Congress to take action as the FTC examines unfair and deceptive pricing practices that inflate and distort costs for consumers

WASHINGTON, D.C. – In a letter sent to the Federal Trade Commission today with more than 41,000 petition signatures, Consumer Reports called on the agency to prohibit companies from charging hidden fees that hike up the cost of products and services for consumers. The FTC is collecting public comments about the rise of unexpected fees for everything from event tickets and hotels to banking and internet services as it considers taking action to address the increasingly common industry practice.

The FTC is examining the issue at the same time the Biden Administration has called on Congress to pass the Junk Fee Prevention Act.  The Administration’s proposal would require online ticket sellers to disclose fees upfront; eliminate airline seat selection fees for families; do away with early termination fees charged by cable TV, internet and mobile phone companies; and ban surprise hotel and resort fees.

“Consumers are beyond frustrated by the explosion of unexpected costly fees they are charged everywhere they turn,” said Chuck Bell, advocacy program director for Consumer Reports.  “These so-called junk fees are not just a nuisance, they are a real burden for many families whose paychecks are already stretched to the limit. The FTC and Congress should do all it can to ban and prevent companies from charging hidden and deceptive fees that distort the true cost of goods and services across all sectors of the economy.”

In 2019, Consumer Reports published an investigation examining hidden fees for a variety of services in major sectors of the U.S. economy.  According to CR’s nationally representative survey of 2,057 U.S. adults in October 2018, at least 85 percent of Americans have experienced a hidden or unexpected fee for a service in the previous two years, and 96 percent found them annoying.  More than two-thirds (69 percent) of consumers told CR they had received a hidden fee from a telecommunications provider, while 44 percent said they had received a hidden fee for a live entertainment or sporting event, and 41 percent received a fee for a gas or electric bill.

CR’s letter points out that it is often very difficult for consumers to research and anticipate the wide range of fees that might be charged when shopping online. Add-on fees can be difficult to spot, requiring consumers to click through multiple web pages or scour fine print to get a full accounting of fees – a gradual reveal strategy that economists call “drip pricing.” So, even when consumers use sophisticated online comparison tools to compare airline, hotel or car rental prices, their search efforts are frequently frustrated by such drip pricing techniques that companies use to add fees on the back end of the transaction prior to checkout.

In its letter to the FTC, Consumer Reports highlights its research on hidden fees charged for pay-TV and broadband internet services, airline tickets, lodging at hotels, car rentals, live entertainment and sporting events, and banking and other financial services. CR’s letter also includes stories collected from over one thousand consumers frustrated by the fees they are routinely charged for such services.

Michael McCauley, michael.mccauley@consumer.org, 415-902-9537